Google, PayPal protest against Brits' pay-by-bonk threesome

Google and PayPal have reportedly been whispering to the EU that allowing the UK operators to band together and promote NFC payments would be anticompetitive and shouldn't be allowed.

The news comes from the Financial Times, which reports that the EU's ongoing investigation into Project Oscar has been taking informal submissions from PayPal and Google as it mulls over the competitive impact of permitting network operators to create a standardised platform, under their own control, for mobile commerce applications including those using NFC.

Project Oscar - a joint venture between Everything Everywhere, O2 and Vodafone - is intended to create a standard platform to host NFC pay-by-bonk and advertising applications, which will work across network operators, but alternatives such as Google Wallet (currently limited to an Android handset or two) reckon they could be locked out if the network operators are allowed to collude in this way.

Specifically the concern lies with the operator subsidy, which reduces the price of handsets which might make money for the operator down the line. This is standard practice; one-click MMS and Bluetooth both warrant a bigger subsidy as they'll generate revenue later on (though overpriced messaging and headset sales respectively) and it's unlikely that Oscar-compatible handsets would be any different.

But oddly enough the Galaxy Nexus, Google's flagship Wallet handset, is "Oscar compatible" in that it supports the Single Wire Protocol (SWP) required to host the secure element (and thus m-commerce apps) on the operator's SIM. So a customer with a Galaxy Nexus whose network operator is part of Project Oscar will be free to download, say, their Barclays Premier Card into the Google Wallet or the Oscar one.

Thus Google, and PayPal, will be complaining that the market dominance of the three operators involved in Project Oscar (Three was never invited) will effectively lock them out even if technically they're still able to compete - PayPal's offering is cloud-based, so even less reliant on operator subsidies.

The problem, for the operators and the EU, is that without a standard platform the operators will have no advantage over Google and its ilk, putting them out of the business and handing Google an effective monopoly on mobile advertising just as it has on web-based adverts, so it would seem that the EU is damned either way.

The matter is far from just being a UK issue. As NFC Times points out there are similar projects being developed in the Netherlands, Germany, Sweden, Denmark and Hungary, all of which will be waiting for the EU decision, which isn't expected until the end of August. ®